National Association of Postal Supervisors

NAPS Legislative & Regulatory Update

May 21, 2009

House Panel Action on HR 22 Delayed

The House postal oversight subcommittee yesterday postponed approval action on emergency legislation to provide financial relief to the Postal Service. The delay is due to continued wrangling by Congressional supporters of the relief legislation with the Congressional Budget Office over how much the postal legislation will actually cost.

Although the postal relief legislation, HR 22, was scheduled to be marked up yesterday by the House Subcommittee on Federal Workforce, Postal Service and the District of Columbia, those plans were scuttled on Monday and subcommittee chairman Rep. Stephen Lynch (D-MA) announced yesterday the likelihood of a subcommittee markup in early June, shortly after Congress returns from its Memorial Day recess.

Lynch also indicated that modifications to HR 22 were likely at markup, with the addition of requirements conditioning assistance on the financial condition of the Postal Service, its efforts to cut costs, and the absence of unfunded liabilities -- and the possibility of a shortening of the assistance period to one that's less than eight years, as the bill proposes.

HR 22 would ease the Postal Service's payment schedule for health benefits for its 400,000 retirees, permitting the Service to begin now to tap a trust fund intended for the payment of future retiree health benefits, instead of waiting until 2016, while still requiring the Service to make payments into the fund.

If Congress doesn’t pass HR 22 by September 30, the end of the fiscal year, the Postal Service says it will be unable to make its full annual contribution — $5.4 billion — into the trust fund. “We would run out of cash. ... There becomes a choice when you’re at the brink of insolvency: Do you pay employees, do you pay suppliers, or do you not pay this $5 billion?” William Galligan, USPS Senior Vice President of Operations, told Congressional lawmakers yesterday. “We break the law by not paying that. Not a place we want to be at.”

The wrangling over the costs of HR 22 grows out of the assessment of the Congressional Budget Office that passage of HR 22 would prompt the Postal Service to ease off its vigorous efforts to cut operational costs, thereby creating new USPS shortfalls. CBO's views are opposed by a host of critics, including House lawmakers, postal employee organizations, mailers, and USPS itself, all contending that the Postal Service cannot afford to give up its efforts to continue to find cost-savings. They also point to the fact that the HR 22 fix relies entirely on the use of Postal Service's own funds -- not taxpayer monies -- representing an intra-government payment.

In the meantime, widespread support for HR 22 among Democratic and Republican lawmakers in the House of Representatives continues to swell, with 315 cosponsors of the legislation.

Click here to check if your House Member has become a cosponsor of HR 22. If your House Member has not yet signed-on as a cosponsor, click here and send them a message (it's easy to do), urging them to support this critical measure.

Congressional Interest in Five-Day Delivery Begins to Grow

Reluctant support among pivotal House lawmakers for a cutback in mail delivery to five days a week appears to be growing, a hearing by the House postal oversight panel revealed yesterday. But Congress is unlikely to embrace the five-day move until it has a clearer understanding of how much the move would actually save.

Postmaster General Jack Potter in January first proposed a seasonal transition to five-day delivery, suggesting that a reduced delivery schedule made sense during the lower-volume summer months. Since then, and in light of its deteriorating financial condition, the Postal Service has sought a more permanent move to five-day delivery operations, contending it could generate as much as $3.5 billion in annual savings. The Postal Regulatory Commission in a December 2008 report estimated savings of only about half as much, predicting that it would yield $1.9 billion and cause mail volume to decline.

"The only way we'll embrace it is if we have no other choice, and we're getting to that point," said Rep. Stephen F. Lynch (D-MA), chairman of the House postal oversight committee, said at yesterday's hearing.

Del. Eleanor Holmes Norton (D-D.C.) asked for an independent assessment of the savings, saying "I would seriously consider it if we had an independent study showing that it would make a structural difference." Rep. Gerry Connolly (D-VA) acknowledged that the post office that our grandparents knew may not be the post office that is needed by their grandchildren.

William Galligan, USPS Senior Vice President of Operations, told the subcommittee that the Postal Service is facing the most significant challenge of its history and said that even a move to five-day delivery would not be enough to bridge the financial gap between revenues and expenses, requiring structural solutions, including the closing and consolidation of mail processing and other facilities.

Phillip Herr, Director of Physical Infrastructure Issues at the Government Accountability Office, said that USPS can streamline its retail network by closing unnecessary post offices and promoting lower-cost alternatives. He also said that GAO may have to consider adding the Postal Service to its High Risk list.

For a good summary of the hearing, prepared by the Association for Postal Commerce, click here. The statements of all hearing witnesses are here. Media coverage is here and here.

Bruce Moyer

NAPS Legislative Counsel